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SSO Supplier Files Complaint Against "Rotten" NOPEC & The Aggregation's Plans To Drop 550,000 Customers To SSO, As SSO Supplier Alleges "Gaming" By NOPEC

SSO Supplier Alleges NOPEC Charged Rates Consistently Higher Than SSO Despite Terms Used In Marketing, Cites Alleged "Grant" Payments To NOPEC, Inc. Totaling Almost 40% Of Revenue

August 31, 2022

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Copyright 2010-21
Reporting by Paul Ring •

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Dynegy Marketing and Trade, LLC (Dynegy) petitioned the Public Utilities Commission of Ohio to order a stay of 550,000 Northeast Ohio Public Energy Council (NOPEC) electric customers to default service, and to investigate NOPEC's intended actions

As previously reported, NOPEC said that it will return its "Standard Price Program" electricity opt-out aggregation customers -- approximately 550,000 customers -- to the standard service offer (SSO) in the service territories of several Ohio electric distribution utilities (EDUs): The Cleveland Electric Illuminating Company (CEI), Ohio Edison Company (Ohio Edison), and Ohio Power Company (AEP Ohio). This change is scheduled to occur as NOPEC customers’ next meter-read date in September 2022.

At Cleveland Electric Illuminating, NOPEC's standard price is 12 cents per kWh, while the utility price to compare is about 6.8 cents per kWh. Similar price spreads exist between the NOPEC standard product and the price to compare at other EDCs.

Dynegy alleged that NOPEC's initial fixed rate for Standard Price Program customers lasts for only three months until the product transitions to a variable monthly rate, which Dynegy alleged has often been higher than the SSO price.

In announcing the drop of customers to the SSO, Chuck Keiper, NOPEC's Executive Director had stated, "As a consumer-focused non-profit, NOPEC is always operating and advocating for what's best for our communities and customers ... When we looked at the price forecasts, it became increasingly apparent that the Price to Compare rate would be a better place for our customers to be through Winter 2023 to save significant money during these economically challenging times."

In a news release, NOPEC had stated, "While individual customers who previously contacted NOPEC could change their rate to the lower utility rate at no charge, Keiper said the organization decided 'it was in all our consumers' best interest' to make the wholesale change and temporarily switch its more than a half-million customers to the utility service."

"We know that households everywhere are struggling with higher bills," Keiper had said. "In our member communities, we had the option to do something to help our customers save money. We're taking that option and doing what is right for consumers."

In order to accomplish the drops in September 2022, NOPEC has petitioned PUCO for a waiver of the required drop notices from the utility, as NOPEC said that CEI and Ohio Edison have informed NOPEC that they can process only 10,000 drop notice mailings per day, due to operational limitations resulting from having to mail out the 2-day letter. "Unless waived, the EDU drop notice rule will significantly delay most Standard Program Price customers’ return to the SSO and prevent them from realizing the currently lower pricing the SSO will provide during the next several months," NOPEC has said

NOPEC has represented that the utilities and Ohio Consumers Counsel support the waiver request

Dynegy has filed a complaint against NOPEC, alleging that, "This planned load shift is unlawful and will have significant and deleterious effects on the wider Ohio electricity market."

Among other things, Dynegy is seeking:

• A temporary thirty-day stay of NOPEC’s plan to drop Standard Program Price customers to the applicable EDUs’ standard service offer on customers’ next meter-read dates.

• The opening of a Commission-ordered investigation on an expedited basis so that the Commission and interested parties such as Complainant can investigate and seek discovery regarding whether NOPEC’s actions are consistent with Ohio law and Commission rules, and whether they run counter to any important state policies.

• An order requiring enforcement of all relevant provisions of NOPEC’s own governance and operation plan, opt-out notices, and other relevant filings, including any customer notice provisions that NOPEC failed to abide by.

• Suspension and non-renewal of NOPEC’s certificate to serve as a CRES governmental aggregator in Ohio (Case No. 00-2317-EL-GAG; Certificate 01-044E) when it expires on December 29, 2022.

Dynegy Marketing & Trade was the successful bidder at various auctions for June 1, 2022, to May 31, 2023, for several SSO tranches with the FirstEnergy EDUs and AEP Ohio to supply SSO load to those EDUs. Dynegy Marketing & Trade, LLC represents 32% of the total SSO load obligations for the planning year June 1, 2022 through May 31, 2023 in FirstEnergy’s service territory where most NOPEC customers reside.

Dynegy alleged, "The effect of this transfer of the load of 550,000 customers onto SSO service will be severe for all SSO load suppliers. EDU SSO obligations and their auctions were not designed to allow for sudden, large-scale drops of customers back to default service. If NOPEC’s planned drop of 550,000 customers to utility default service is allowed to go into effect, Dynegy Marketing & Trade and other full-requirements suppliers under each EDU’s SSO will be compelled to procure, on short order, massive amounts of capacity, energy, and ancillary services to meet these customers’ requirements at prices that are already approximately double the clearing prices they are paid by the EDUs."

"This will only destabilize current wholesale market prices further and cause all SSO suppliers to incur material losses because their compensation remains based on the price at which they cleared the most recent auctions. Although the customers opting into default service will individually enjoy significant short-term cost savings from such action, the massive drop to default service will harm SSO suppliers and have severe adverse effects on future auctions, causing serious, long-term harm to customers that rely on default utility service under the SSO," Dynegy alleged

Dynegy alleged, "On August 25, 2022, the day after NOPEC filed its Material Change Notice, NOPEC’s Chief Marketing and Communications Officer, Dave Jankowski, gave an interview to WOIO Channel 19 News in Cleveland, Ohio. In response to a reporter’s question whether NOPEC’s decision to drop 550,000 customers back to SSO supply would leave it with unused electric supply and cause it to lose money, Mr. Jankowski stated that 'a good portion of our ... electricity that we buy we did buy as part of our base load prior to the run-up, so we ... will be able to sell that energy back to the market, that will keep us whole in the meantime.'"

Dynegy alleged, "In short, NOPEC appears to be attempting to engage in activity more befitting a hedge fund than a government aggregator committed to working for the best interest of energy customers. It is threatening to destabilize the electrical markets by unilaterally dumping 550,000 customers onto SSO service, while simultaneously selling back to the market -- presumably at a profit -- the energy it had purchased to service its customers’ load. NOPEC, of course, did not disclose its planned sale-back of its base load to the Commission in its Material Change Notice."

Dynegy alleged, "NOPEC’s aggregation program, standing alone, pushes the bounds of the intent and spirit of Ohio’s aggregation laws by giving a 'non-profit' entity a massive customer base of over one million utility accounts for more than 2.25 million Ohioans and nearly 70,000 small businesses in 242 communities covering 19 counties. NOPEC publicly claims on its website and marketing materials that it uses its enormous and unprecedented buying power to 'buy in bulk, so you can save money on gas and electric bills' and its logo tagline is 'No one does more to lower your utility bills.' But an examination of NOPEC’s products and pricing through its aggregation program reveals that these statements are patently untrue."

Dynegy alleged, "only 2.5% of NOPEC’s aggregation customers are actually guaranteed to save any money on their electricity bills when compared to the utility default service price. The remaining 97.5% of NOPEC’s aggregation customers are on the murky 'Standard Price Program' that offers a short-term fixed introductory rate followed by an immediate rollover into an ill-defined and opaque monthly variable rate that is supposedly 'determine[d]' monthly between NOPEC and NextEra based on 'many different factors.' Since December 2021, all of NOPEC’s new aggregation customers on the Standard Price Program have paid more than the utility default rate on their short fixed-term introductory rate, after which those unsuspecting customers rolled over into a variable rate that is now nearly double the utility default rate. All of these customers would have been much better off by staying on utility default service for the past nine months—all during an extremely challenging inflationary period for Ohio residents -- and NOPEC knows it."

Dynegy alleged, "NOPEC’s aggregation program is rotten and raises troubling questions. If NOPEC is not using its massive buying power to secure rates that are more favorable than utility default rates, the question is who is benefitting financially by having over 97% of NOPEC’s customers pay more for electricity for all of this year and part of last?"

Dynegy also alleged, "NOPEC is not even complying with its own governance plan, much less the regulations that govern CRES governmental aggregators in the Ohio marketplace," citing opt-out notices filed by NOPEC in April 2022

Dynegy alleged that NOPEC, "has violated Ohio law and commission regulations because its aggregate program contracts do not disclose NOPEC's pricing and contract terms."

Dynegy alleged, "NOPEC’s April 2022 Opt-Out Notices state only that, with respect to Standard Program Price price-changes, 'Supplier [NextEra] and NOPEC will determine this subsequent price based on many different factors, which will include, without limitation, competitors’ prices, applicable industry charges, wholesale market conditions and electricity supply sources.' NOPEC has failed to comply with Rule 4901:1-21-12(B)(7)(c)(i)-(ii) because NOPEC’s and NextEra’s customer contracts fail to inform consumers -- or competitors or other interested parties -- how NOPEC’s variable-rate Standard Program Price pricing is determined."

Dynegy alleged, "The Commission should investigate all of NOPEC’s statements of 'savings' and the lack of 'tricky contracts' and 'no risk terms and conditions' as deceptive and misleading marketing by a CRES that has caused significant harm to Ohio’s ratepayers. Despite its public statements seeking to justify its illegal drop to the contrary, it is apparent that NOPEC has been deceiving its customers -- and the marketplace as a whole -- about the savings it purports to deliver to member communities. NOPEC is now scrambling to make it appear through its press statements and news interviews that this unprecedented move of 550,000 customers to default service is great for customers and that NOPEC has their back, when in reality the products offered by NOPEC in the first place are deeply suspect and merit a thorough investigation."

Dynegy alleged, "NOPEC has failed to comply with Ohio Adm.Code 4901:1-21-12(B)(4) and (B)(9) because NOPEC and NextEra’s customer contracts do not authorize NOPEC to terminate contracts in the way its Material Change Notice threatens. Specifically, NOPEC intends to effectively terminate 550,000 customers but has not shown that the termination conditions set forth in section 12 of the April 2022 Opt-Out Notices have been satisfied. NOPEC cannot make that showing; NOPEC’s and NextEra’s customer agreements as written do not give them authority to unilaterally disenroll customers from the Standard Program Price program and to drop them, en masse, back to SSO service."

Dynegy alleged, "Someone has benefitted from NOPEC’s massive buying power, but it certainly has not been its aggregation customers. In its 2021 annual report, NOPEC disclosed that it made over $16.2 million in revenue. Almost 40% of that revenue, or $6.2 million, was paid to a 'NOPEC, Inc.' in the form of an unspecified 'grant.' What is that payment, what does that grant entail, and how is it serving NOPEC’s aggregation customers? NOPEC also paid its own employees nearly $2.5 million in salaries and benefits in 2021, over $300,000 more than salaries and benefits paid in 2020. In these significant ways, NOPEC is not a usual aggregation program, where the community has come together to collectively negotiate better rates for its community members. Instead, NOPEC is paying its own employees and making amorphous payments to the tune of millions of dollars to a 'NOPEC, Inc.' while its own aggregation customers pay more for electricity then they would from default utility service."

Dynegy alleged, "The Commission should conduct a thorough investigation of NOPEC’s aggregation program. Among other items, the Commission should investigate (a) NOPEC’s product offerings, (b) monthly variable price negotiations and rate factors, (c) the rates charged to its customers, (d) why NOPEC limited its 'percent off of SSO product' to 2.5% of its aggregation customers, (e) whether NOPEC has purchased energy as publicly stated by its spokesperson contrary to its own governing documents, (f) to what extent exactly is NOPEC benefiting from now reselling energy to the market and why are those savings not being passed on to its aggregation customers, (g) how NOPEC made its unprecedented decision to halt a supply contract binding 550,000 customers through January 2023 and the terms of any settlement it may have reached behind closed doors with NextEra related to that unilateral decision, (h) NOPEC’s decision to not even comply with its own governing documents regarding the provision of 90-days’ notice prior to terminating its aggregation program, (i) NOPEC’s deceptive marketing statements as a CRES that are subject to the Commission’s jurisdiction, (j) whether NOPEC is fit to continue to operate a massive aggregation program that covers over 11% of the entire residential population of the State of Ohio, (k) NOPEC’s financials including accounting of payments to 'NOPEC, Inc.', (l) how NOPEC manages to keep communities in its electricity aggregation program when residents of those communities are clearly losing money taking part in NOPEC’s aggregation, including, but not limited to, the role of 'grants' awarded to member communities and the role of any contractual obligation of the member community to return that 'grant' if they exit the aggregation, and (m) and whether NOPEC is abiding by Ohio’s aggregation and CRES rules."

Dynegy alleged that, "allowing NOPEC’s massive drop will open the door for FERC to assert its exclusive jurisdiction over SSO supply agreements and to investigate NOPEC for possible market manipulation."

Cases 22-0817-EL-CSS, 22-0806-EL-WVR


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